Texas farmers hit hard by Chinese sorghum tariffs

1of3The visitors got the opportunity to ride the harvester machine while witnessing the sorghum being harvested during a tour the past summer for Chinese buyers of of U.S. sorghum. Huang Rui, quickly spans a pictures of her colleagues and friends as they board the harvester. China is the largest importer of Texas sorghum, so the announcement of a 179 percent deposit against possible anti-dumping duties hits hard.Photo: Srijita Chattopadhyay /San Antonio Express-News

2of3Song Qun, explains to his colleagues how the sorghum is harvested using the big tractor at the Chopelas Farms.Photo: Srijita Chattopadhyay, Staff / San Antonio Express-News

3of3This Wednesday, Aug. 15, 2012 file photo shows sorghum at a farm in Waukomis, Okla. American sorghum farmers fear they will lose their largest export market if China follows through with a tariff on their crop. China imposed preliminary anti-dumping tariffs of 178.6 percent on U.S. sorghum in mid-April 2018 as part of its ongoing trade dispute with the U.S. (AP Photo/Sue Ogrocki)Photo: Sue Ogrocki, STF / Associated Press

News China was slapping U.S. grain sorghum with tariffs of 179 percent immediately drove down prices and has Texas farmers scrambling for new markets.

“This is a show stopper, I mean this hurts growers,” said Wayne Cleveland of the Texas Sorghum Producers said Wednesday. “It stops trade. A 179 percent tariff stops grain sorghum from moving.”

The Chinese Commerce Ministry on Tuesday announced it would require importers to post bonds of 178.6 percent on the grain following its preliminary ruling that U.S. sorghum was being sold at artificially low prices.

The grain terminal at the port of Corpus Christi on Tuesday stopped accepting sorghum, as virtually all of the exports were for China.

Farmers already were paid for the three to five 40,000-ton boatloads currently at sea, but Cleveland said the loss of the commodity’s biggest buyer means they are scrambling to sell off existing crop and thinking of switching future plantings to cotton or corn.

Texas is the second largest U.S. sorghum producing state after Kansas, in 2017 growing 1.65 million acres. It’s among the world’s top cereal crops and is well suited to Texas because of its drought tolerance. Chinese imports of U.S. sorghum have soared in recent years as livestock producers found it to be a good feed alternative to genetically modified U.S. corn. It is also used to make baijui, a Chinese liquor.

U.S. Sorghum prices dropped 30 cents a bushel after the tariffs, Cleveland said, while Australian sorghum rose about $10 per metric ton.

While China denies it, farmers viewed it as a thinly veiled counter-attack to the just-announced U.S. tariffs on Chinese solar panels and washing machines.

“I think this is quid pro quo at its best,” Cleveland said. “We’re a billion dollar industry, and if you look at the tariffs that we placed on China with aluminum and steel, they were a billion dollar industry. They didn’t want to pick any smaller or any bigger.”

The trade dispute between the U.S. and China has escalated, with the U.S. imposing tariffs on aluminum and steel and the Chinese returning the jab with proposed 25 percent tariffs on a list of agricultural products including cotton, corn, beef and soybeans, a huge U.S. crop of which more than 30 percent currently goes to China.

There has been good news for the U.S. automobile sector, though, as China on Tuesday announced loosened restrictions on foreign ownership of automobile and other manufacturers, but the nation’s farmers and ranchers feel stuck in the middle.

Of the 8.6 million tons of U.S. sorghum exported in 2015-16, 7 million tons went to China.

The U.S. Trade Representative’s office on Tuesday said it would “carefully review China’s measures on sorghum and take action as warranted, including through a World Trade Organization case if appropriate.”

U.S. Secretary of Agriculture Sonny Perdue in a statement Wednesday called the claim that the U.S. is dumping sorghum “ludicrous.”

“China can buy product from anywhere they choose. This is clearly a political decision by the Chinese and we reject their premise,” Perdue said. “The fact remains that China has engaged in unfair trade practices over decades and President Trump is correct in holding them accountable. We remain committed to protecting American agricultural producers in the face of retaliatory measures by the Chinese.”

Sorghum growers say they would win any WTO case.

“There’s no dumping here we,” Cleveland said. “We don’t have anything to dump. This was an arbitrary market that you know, they ran the price up, they bought it at rapid pace. ... We certainly want them back in the market but we’re not going to sit around and wait for them to come back. We’re going to go find other markets.”

Texas Department of Agriculture Commissioner Sid Miller on Wednesday noted in a news release that last week, “China accepted 116,000 tons of Texas sorghum and paid a premium price for it,” Miller said. “This is just another example of what I call ‘smack talk’ between trading partners. They need Texas-grown grain, and we’re happy to sell it to them.”

Miller in an interview said a TDA trade mission to Spain several weeks ago paid off with contacts that had already agreed to buy up some of the grain that had been intended for China.

“In my opinion who’s the biggest loser? And it’s the Chinese on this because you’ve got grain en route and they grow a lot of poultry and a lot of pork and that’s the main ingredient,” he said. “So that’s diverted now, and those chickens and hogs ... for them to make new arrangements, get all the paperwork through to buy grain from Canada or Mexico or South America it’s going to take logistical hurdles at a minimum.”